RDR commission replacement proposals may confuse intermediaries' role
Advisers believe the market will change for the worse if the FSA uses the Retail Distribution Review (RDR) to force intermediaries to charge a fee rather than a commission when selling protection.
In this month's Market Views (p.12), Matt Morris, senior policy adviser at LifeSearch, said: "Few people would pay a fee for protection advice and introducing such a system would damage the role of the IFA and be detrimental to the consumer."
In addition, Sara-Ann Burgess, managing director of Burgesses, said that the proposals would mean consumers will confuse sales representatives in banks with financial advisers. She said: "The FSA appears to have bowed to the wishes of the industry big-boys by refusing to clear up consumer confusion by banning in-house sales people calling themselves 'advisers'."
It was also predicted that the RDR would force scores of advisers to leave the industry altogether. Financial adviser firm Bradley Hamilton said the introduction of QCA level four qualifications as the minimum entry level for investment advisers would be to blame.
Sheriar Bradbury, managing director, added: "The canny adviser looking to sell up would be well advised to price down ahead of the current market values, as I fear prices have considerably further to fall: not only are the financing deals no longer available but with the introduction of diploma level entry qualifications the market is in danger of becoming saturated."
However, an opposing view was put by Simon Clamp, managing director-UK at Friends Provident. He said: "The introduction of the Professional Standards Board and the requirement for the same levels of competency regardless of status are a key step in the rebuilding of trust and confidence in the industry."
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